War in Ukraine. Could frozen Russian assets be used to finance aid to kyiv?

This is a long-standing request from kyiv: will we be able to seize and use the frozen billions of Russian euros to help Ukraine? Marie Toussaint in turn proposed it during the first debate of the European elections Thursday evening : “We want to use the 200 billion euros of frozen Russian assets and put them in support of Ukraine,” declared the Greens candidate.

“Favorable” stay, but…

She is not the only one, nor the first: faced with American reluctance, many Western leaders are looking for alternatives. Among them, using the billions of euros of Russian assets frozen since the invasion of Ukraine. The American Secretary of State for the Treasury, Janet Yellen, herself called for this solution. “We are in favor of this option… provided that it respects international law,” the French Minister of Foreign Affairs said on Wednesday. Stéphane Séjourné.

How much is this jackpot?

In total, we are talking about nearly 300 billion euros of Russian assets frozen by the G7 and European Union countries since February 2022.

In Europe, the bulk (around 200 billion euros) consists of assets of the Russian central bank stored on the Euroclear platform in Belgium. This sum is greater than Ukraine’s annual GDP, which reached 200 billion euros in 2021, before collapsing the following year. In 2023, these billions also produced nearly 3.5 billion euros in interest, after 1.25 billion in 2022. On February 12, the European Council already made it possible to invest these interests and make them grow on separate accounts. But for the moment, it is impossible to go further.

Several legal… and political obstacles

As demanded by the United States, several European countries have said they are in favor of the idea of ​​purely and simply confiscating Russian assets. Estonia was the first to pass a law to this effect. British Foreign Secretary David Cameron assured the House of Lords that there is “a legal route to do this”. But nothing is less certain: across the Atlantic for example, to dispose of these funds, a declaration of war with the country concerned is necessary. Unless we create legislation for the occasion… but at the risk of dissuading future foreign investors from “stored” their assets in Europe.

Above all, the European Commission committed, when it imposed its sanctions, to return its assets to Moscow if the Russian army withdraws from Ukraine and pays for reconstruction. A very improbable hypothesis today, but what would happen if the Kremlin ended up doing so tomorrow, or later?

Bonds or a supertax?

Since mid-February, the European Union has therefore been working on a text which should allow, from July according to the Swiss daily The weatherto pay Ukraine the “profits” generated by the frozen assets – the famous interest.

Then, the European Union is considering the creation of a structure that could lend money, the repayment of which would be ensured by this interest. The amount would be immediately returned to Ukraine. This device should be presented on March 21 or 22, depending on the Financial Times. Another hypothesis considered, more risky but a priori simpler… and more lucrative: Europe could create an exceptional “supertax”, covering both Russian assets and the interest produced. At the national level, Belgium already pays Ukraine a large part of the 25% of the profits tax levied on the Euroclear group, which “stores” Russian assets in Belgium.

What can Moscow do?

Logically, the Kremlin has already promised “inevitable retaliatory measures” if the European Union ventures down this path, reports the Russian daily Moskovsky Komsomolets. With a first precedent: on Thursday, Switzerland voted by a narrow majority to use Russian assets frozen in the Swiss Confederation, with a view to helping Ukraine. Moscow immediately summoned the Swiss ambassador to Moscow. “Russia strongly condemns this measure,” slammed the Russian Ministry of Foreign Affairs, denouncing “a state theft” of “Russian state property”, under the cover of a “completely invented” reparation mechanism. pieces “. Switzerland “only” has 7.3 billion euros in Russian assets. If Switzerland or others “persist,” Moscow threatens to “also” take “illegal” measures, such as the forced nationalization of foreign companies on its soil.